Half the World's Hot Spots

Broadband-crazy South Korea is rushing into Wi-Fi, too

South Korea didn't set out to beat every other nation to the latest info-tech and telecom innovations, but sometimes it seems that way. Korea leads the world in the number of high-speed wireless phone connections and interactive online computer game players. And it has by far the highest proportion of fixed-line broadband subscribers -- 10.7 million households, 70% of the total in a population of 48 million. So no one should be surprised that in the competition to set up Wi-Fi hot spots, Korea is kilometers ahead of the pack.

In the last 18 months, KT Corp. (KTC ), South Korea's former phone monopoly and its biggest broadband and Wi-Fi player, has set up 8,500 wireless commercial local-area networks, or hot spots. That's more than half the world's total, according to international IT research firm IDC. Thousands of universities, hotels, restaurants, and other public facilities in densely populated Korea boast Wi-Fi transmitters, and KT is just getting started. Earlier this year, the company earmarked $100 million to expand the number of local area networks to 16,000. "The name of the game is to offer services allowing our subscribers to get on the Net anytime, anywhere," says Jang Hyun Tae, KT's director of fixed-mobile convergence business.

Nowhere is Wi-Fi more popular than on college campuses, where thousands of students use it for research and other schoolwork and to download and listen to their favorite music. Not having to search out a fixed-line computer connection "makes my life much easier," says Yang Bora, a 27 year old graduate student in mass communication at Yonsei University in Seoul. "These days, I can do so much more after my classes."

The aggressive push into Wi-Fi makes Korea a perfect place to gauge where the mobile Internet market is going. "Korea has already been a test market for fixed-line broadband services and high-speed wireless-data communications," says Kim Yoo Jeong, senior researcher at the state-funded National Computerization Agency. "The nationwide Wi-Fi network will make it an ideal test bed for all sorts of telecom devices." One gadget already being tested by a local company is a personal digital device that would switch from Wi-Fi to 3G, depending on where the user was located.

A crucial factor in helping Wi-Fi to grow fast in Korea is that it is piggybacking on broadband. Some 112,000 of KT's fixed-line broadband subscribers have signed up for Wi-Fi, which costs $8.30 a month extra. A stand-alone Wi-Fi subscription costs $21 monthly, still less than in the U.S. and Europe. At the rate it is signing up subscribers, KT expects the number of users to jump from the current 157,000 to more than 1 million by the end of this year. Wi-Fi revenues for the year are expected to total $125 million.

Because Wi-Fi technology is less expensive to install than 3G networks, analysts expect a quicker financial return. "I think KT's Wi-Fi business could break even in a couple of years," says Han In Q, a telecom analyst at IDC Korea, "when there will be a hot spot within a few minutes' walk in most urban areas."

Global computer giants and big names in consumer electronics in Japan and Korea, including Sony Corp. and Samsung Electronics, are all pushing Wi-Fi technology. They want it to become the heart of snazzy home-networking systems that allow subscribers to control their home appliances and security devices remotely while they are on the move. If that high-tech vision ever becomes reality, guess which country is most likely to get there first?

By Moon Ihlwan in Seoul

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